SACRAMENTO, Calif. — Daniel Allen Coats, 34, of Turlock, was sentenced today by United States District Judge Garland E. Burrell Jr. to one and a half years in prison and ordered to pay $8,938 in restitution for his role in a conspiracy to defraud the United States by filing false claims for federal tax refunds, Acting United States Attorney Phillip A. Talbert announced.
According to court documents, beginning in 2011, Coats and three fellow inmates in the California Correctional Center in Susanville obtained the personal identification information of other inmates and provided it to co-defendants outside the prison. The co‑defendants then used that information to prepare and file false income tax returns with the Internal Revenue Service, claiming refunds to which the inmates were not entitled. Coats also filed three false tax returns in his own name.
In all, the conspiracy resulted in at least 247 false claims for income tax returns in the tax years 2008 through 2011. Although the IRS stopped some of these refunds, approximately 138 fraudulent refunds totaling approximately $219,984 were issued.
“Prison refund fraud schemes are a priority for Special Agents at IRS Criminal Investigation,” said Cindy S. Chen, Acting Special Agent in Charge, IRS Criminal Investigation. “Today’s sentence of Daniel Coats is an example of our hard work in combating tax fraud and assuring to the public that those who commit tax fraud are prosecuted to the fullest extent.”
This case was the product of an investigation by the IRS, Criminal Investigation, the Federal Bureau of Investigation, and the Investigative Services Unit at the California Correctional Center. Assistant United States Attorney Amy Schuller Hitchcock prosecuted the case.
On July 8, 2015, co-defendant Edwin Ludwig IV was sentenced to seven years in prison for his role in the scheme. On July 29, 2016, Judy Ruth Mullin was sentenced to 21 months in prison for her participation. One other defendant has pleaded guilty and is set for sentencing later this month. The charges against the remaining three co-defendants are pending. The charges against them are only allegations; they are presumed innocent until and unless proven guilty beyond a reasonable doubt.